Three auction clearinghouses have come to dominate digital advertising: Prebid, Google open bidding (formerly known as exchange bidding) and Amazon Publisher Services’ Transparent Ad Marketplace (TAM).
With the rise of header bidding, publishers needed a way to have multiple exchanges bid against each other in real time. Prebid launched in 2015 as an independent and open source option, Google’s open bidding debuted in April 2016 and Amazon introduced TAM at the end of 2016. Three years in, each has become a leader. Many publishers use two or three of these auction clearinghouses.
But should buyers and publishers start to pare down who they work with?
To date, most buyers haven’t been picky about whether they buy a publisher’s inventory through TAM, open bidding or Prebid. They also haven’t been able to ascertain all of the nuances between these environments, or even which setup they won a bid through.
But that’s about to change. Two upcoming labeling standards from the IAB Tech Lab (SupplyChain object and sellers.json) will make it easier for buyers to determine if they bought an exchange’s impression through Prebid, Google open bidding or Amazon Publisher Services’ TAM.
And if they wanted, buyers could decide to work with the fastest solution, the one with the lowest tolls or the most data and transparency.
The ad industry’s incumbent leader, Google; its outsider challenger, Amazon; and the independent scrappy underdog, Prebid; may see adoption rise or fall as buyers prune their paths.
Here are seven factors that buyers, publishers, DSPs and exchanges should consider when navigating between these three dominant paths to a publisher’s ad inventory.
One: fees
Each of the three auctions exacts a tax for its services, and buyers care immensely about getting the lowest-fee path to supply.
Google open bidding charges the highest fee, a 5% fee for display and outstream inventory and a 10% fee for video and app. That charge is on top of the exchange fee. So an exchange would take its cut from the buyer’s bid, then Google would take its fee.
Amazon Publisher Services’ TAM charges a one-cent CPM only for impressions it monetizes, but publishers must have a direct relationship with their SSP to access that lower fee. Amazon Unified Ad Marketplace (UAM) runs on the same infrastructure but handles billing and reconciliation for smaller publishers. UAM charges a 10% fee for outside buyers, making it more expensive than open bidding for display inventory.
Amazon DSP customers get a break, and don’t pay any fees to use TAM or UAM.
Prebid doesn’t charge fees because it’s an open-source solution. But publishers do pay a price in terms of operational complexity and engineering investment to configure and optimize Prebid, noted Tom Kershaw, CTO of Rubicon Project and chairman of Prebid.org.
So some publishers pay an exchange to manage Prebid. Rubicon Project exacts a toll for each impression that flows through Demand Manager, its managed wrapper that sits on top of Prebid. AppNexus operates a similar solution, Prebid Enterprise.
The other key detail about fees is how exchanges submit bids to each of these auctions. Buyers and publishers usually prefer for bids to be submitted on a net basis – or after all the fees have been taken out. If a buyer submits an identical bid to two or more auction aggregators, the bid from the exchange that takes the lowest fees would win, all else being equal.
TAM and Google open bidding always operate on a “net bid” basis. Prebid is most often configured on a net basis, but the choice is ultimately left up to the publisher.
Two: speed
Next to fees, speed is what publishers and buyers care about most in choosing an auction clearinghouse. Each auction house varies in how fast it can transact and render an ad. Auctions in offsite servers run faster than auctions that run client side, for instance, in a mobile web browser.
Because open bidding runs within Google Ad Manager, it’s completely server side. Open bidding adds only 60 milliseconds to Google Ad Manager’s start-to-finish process, for a total of 150 milliseconds to 300 milliseconds to run an auction, according to Google.
TAM initiates on the client side, but the auction runs server side. A key benefit is that performance isn’t affected by how many partners a publisher adds, Amazon said.
TAM often renders an ad on page faster than Google open bidding, according to publisher yield consultant Tony Patel. During the month of October on a site he manages, TAM loaded 86% of ads within 500 milliseconds, and 93% by one second. In contrast, 69% of ads filled by Google open bidding loaded within 500 milliseconds, and 77% of all ads loaded within one second.
Both of these server-side auctions run fast. In contrast, Prebid performance can suffer when publishers add too many partners because their requests get bottlenecked by the browser. Browsers can only send a set number of requests at a time, so a publisher that puts 20 partners in via Prebid might see them processed six at a time, for example.
There’s another aspect to speed as well – how easy it is to set up an extra auction – and here, TAM and open bidding also have an advantage.
Server-side solutions like Amazon Publisher Services’ TAM and Google open bidding are easy to use and can be set up quickly.
But they don’t offer as much customization or granularity as open source Prebid, a key draw for publishers.
Prebid lets publishers tune timeouts, or how long they wait for a response before they show an ad. These options let publishers balance experience and revenue, deciding exactly how long (500 milliseconds? One second?) they can wait for bid responses before their readers will get impatient or a slow-loading ad impacts viewability. TAM also allows publishers to control timeouts.
Three: floor data
Buyers want to win auctions, and they need data to support that quest.
Prebid and TAM don’t use floors, so buyers may bid below the floor without knowing. In lieu of floors, Amazon allows publishers to configure price increments by ad placement and slot. And Prebid plans to add floors in Q4.
Because Google open bidding sits within the publisher’s ad server, auction participants get the most information to guide their bidding.
In the open-bidding bid request, exchanges will see a floor created from a publisher’s pre-configured floor for a given ad placement (such as a banner or a video unit) as well as direct-sold campaigns. So a $20 CPM bid for a direct-sold campaign that’s behind on its delivery goals may get passed into open bidding as a $50 CPM floor to ensure the campaign delivers on time, Google said.
TAM and Prebid can’t access this data during their header auctions.
However, when Google made its changes to unified pricing and switched to a first-price auction this fall, it removed one distinct advantage in open bidding, known as “last look.” Until a couple of months ago, open bidding used the results of the Prebid and TAM auctions as the “price to beat” for all the open-bidding buyers. That extra information meant that open-bidding buyers could outbid Prebid and TAM winning bids.
“Information is power in our industry,” Kershaw said. “The absence of bid data was a huge disadvantage for Prebid and this is being corrected.”
Four: data transparency and extra data
Prebid, open bidding and TAM each give publishers and buyers access to different historical data about performance. For publishers in particular, this data access can open up – or limit – how they tune each auction.
Prebid offers the most granular information. Publishers get consistent access to log-level data.
TAM offers samples of auction logs to publishers so they can verify that Amazon is running a first-price auction – but not full logs, which could lead to data mining. Buyers receive aggregated performance information about how they compare to their peers.
TAM also offers publishers “shopping insights,” an add-on that helps publishers figure out its readers’ shopping interests on Amazon. In addition, if a buyer wants to reach audiences that index high in certain product categories, they can set up a private marketplace using TAM and the Amazon DSP to access that unique Amazon data.
Open bidding, within Google Ad Manager, doesn’t allow publishers complete log-level data access. Publishers 
that used to join their open-bidding data with their Prebid data in order to get a complete view of their inventory can no longer do so, because Google no longer allows “Bid Data Transfer” files to be joined, citing privacy concerns around user-level data.
“With open bidding, we are largely dependent on a pre-fixed number of key value pairs in order to effectively capture log-level details and make decisions,” said Nicole Lesko, SVP of data, ad platforms and monetization at Meredith.
Within open bidding, buyers with losing bids now also get information about highest price, or minimum bid to win, and that extra information allows them to better tune their bids.
Five: unique exchange paths
Google open bidding, Amazon Publisher Services’ TAM and Prebid offer buyers access to an overlapping but not completely duplicative set of inventory.
AppNexus and TrustX, for example, are among the exchanges that don’t participate in Google open bidding. TrustX wants the most direct, low-fee path to supply so it doesn’t want to work with a partner that adds a fee, according to CEO David Kohl. And AppNexus historically takes strong anti-Google positions.
And some exchanges told AdExchanger they wanted to integrate with TAM but were rejected by Amazon because they were viewed as competition.
The Google exchange formerly known as AdX doesn’t participate in Prebid or TAM, leaving a gap which prevents publishers from shifting their entire auction to the header.
From a buyer’s point of view, this decision cuts down on the number of duplicate impressions they see. When exchanges integrate everywhere, buyers can end up bidding in three separate auctions where multiple exchanges sell the same ad impression. DSPs want to avoid duplicative paths to the same impression because it drives up costs.
Thus far, publishers are incentivized to do the opposite, because they see an increase in revenue as they stack up more supply sources.
Six: adding an intermediary
Buyers want to buy through direct paths, but not all of these auction clearinghouses are considered direct paths to a publisher’s inventory.
Being classified as an intermediary is a black mark in a world where many buyers want to cut out all indirect relationships – one reason that the standard became a source of contention between Google and The Trade Desk earlier this year.
Google open bidding and UAM handle payment and reconciliation for publishers, classifying them as financial intermediaries according to the new IAB Tech Lab transparency specs.
“Exchanges pay them, they take their cut and then pay publishers. That’s a financial intermediary,” said Sam Tingleff, CTO of the IAB Tech Lab.
In contrast, Prebid and TAM are considered direct, “non-financial intermediary” paths to supply, because they don’t handle payment.
If buyers only choose non-intermediary paths, they may buy less through Google open bidding and Amazon’s UAM in favor of Prebid and TAM.
Seven: match rates
Each of these three setups varies in terms of match rate.
In Prebid, exchanges put their code on the publisher’s page. Match rates are high.
Server-side connections require an extra match for everyone but the “host” exchange that retains a tag on the page – such as Google for open bidding or Amazon for TAM. All other exchanges within that auction will experience a lower match rate because of that matching “hop.”
Mileage may vary. Exchanges use a variety of technical approaches to prop those match rates back up to where they would be with a Prebid connection. “These are all at-scale platforms that are highly incentivized to optimize their match rates,” Tingleff said.
One exchange shared that it sees 50% lower match rates on Google open bidding compared to Prebid. But another exchange working in Prebid and open bidding it sees virtually identical match rates between the two. Google shared that one of its partners, RhythmOne, sees 80% match rates in open bidding.
Seven factors
To date, publishers have done the most testing between TAM, open bidding, Prebid and a host of other header-bidding wrappers on the market. Most have concluded that more options are better – as long as they don’t overload their client-side auction with too many exchanges or too long of a timeout.
Exchanges, too, find they integrate more tightly with some tech than others. An exchange with a lightning-quick server-side response and a strong match rate with Google might outperform its peers and gain market share, while an exchange that can return bids fastest to TAM might benefit there.
Buyers will be the next group to choose the paths that work for them. Publishers are fielding more questions from buyers who want to know the path with the lowest “tax” or the fewest bugs. Buyers also want to know if they gain a technical advantage by buying video inventory from one path or setting up a private marketplace in another.
And DSPs and buyers are pushing for exchanges to quickly adopt sellers.json and SupplyChain object, which will give them control to see if they should buy through all of these auction aggregators, or pare them down to just a handful.
When buyers start to make choices about where to buy their ads, the industry could see Amazon Publisher Services’ TAM, Google open bidding or Prebid prevail, or market share shift between the three auction clearinghouses.
